INDIRECT AND MUTUAL HOLDINGS

VERSI RIFQI Imooedcekalieehnarziezzsangadd~

Multiple Choice Questions
1.

Pallet Corporation owns 80% of Adelt Corporation and Adelt owns 60%
of Bajo Inc. Which of the following is correct?
a. Bajo should not be consolidated because minority interests hold
52%. (Asumsi:karena tdk mmegang kendali)
b. Bajo should be consolidated because the 60% of Bajo stock is held in
the affiliate structure.
c. Pallet has 8% indirect ownership of Bajo.
d. Pallet has 80% indirect ownership of Bajo.

2.

Page Corporation acquired a 60% interest in Ace Corporation at a price

$40,000 in excess of book value and fair value on January 1, 2005. On the
same date, Ace acquired a 70% interest in Bader Corporation at a price
$30,000 in excess of book value and fair value. The excess purchase cost
paid by Page and Ace was attributed to goodwill. Separate incomes
(excluding investment income) for the three affiliates for 2005 are as
follows: Page, $500,000, Ace, $300,000, and Bader, $400,000.
Pages net income for 2005 is
a.
b.
c.
d.

$808,000.
$848,000.
$920,000.
$960,000.

Jawaban:
PageAce (60%)
AceBader(70%)
So, PageBader (42%) (secara tdk langsung)
Pages Net Income:
- $500.000 ditambah dengan;
- 60%x300.000= $180.000 ditambah dengan;
- 42%x400.000=$168.000
TOTAL= $848.000
Use the following information in answering questions 3 and 4
Paint Corporation owns 82% of Achille corporation and Achille Corporation owns
80% of Badrack Corporation. For the current year, the separate incomes of Paint,
Achille, and Badrack are $120,000, $100,000, and $50,000, respectively.
3.

Noncontrolling interest expense from Badrack is

a. $9,000.
b. $10,000.
c. $20,000.
d. $40,000.
Jawaban:
NCI Exp Badrack = %NCI x Net Income Badrack
= 20% x $50.000
= $10.000
4.

Consolidated net income for Paint Corporation and Subsidiaries can be

determined by the equation:
a.
b.
c.
d.

$234,000.
$244,800.
$260,000.
$270,000.

5.

Pabari Corporation owns an 80% interest in Alders Corporation and

Alders owns a 60% interest in Babao Corporation. Both interests were
acquired at book value equal to fair value. During 2005, Alders sells land
to Babao at a profit of $12,000. Babao still holds the land at December 31,
2005. Profits and (losses) of the three companies for 2005 are:
Pabari Corporation $180,000
Alders Corporation 72,000
Babao Corporation (30,000)
Consolidated net income and noncontrolling interest (loss), respectively,
for 2005 are
a. $211,200 and ($1,200).
b. $211,200 and ($3,600).
c. $213,600 and ($1,200).
d. $213,600 and ($3,600).

6.

Pablo Corporation acquired 60% of Abagia Corporation on January 1,

2004, at a cost of $20,000 in excess of book value. Also, on July 1, 2004,
Pablo acquired 60% of Babin Corporation at book value. On January 1,
2005, Abagia acquired a 20% interest in Babin at a cost of $10,000 in
excess of book value. The excess purchase costs paid by Pablo and
Abagia were attributed to goodwill.
On July 1, 2005, Pablo sold land with a book value of $20,000 to Abagia
for $40,000. The $20,000 unrealized gain is included in Pablos separate
income. Separate incomes for the affiliated companies (excluding
investment income) for 2005 are:
Pablo $250,000
Abagia
70,000
Babin 100,000
Consolidated net income for the three affiliates is
a.
b.
c.
d.

$304,000.
$324,000.
$344,000.
$364,000.

Use the following information for Questions 7, and 8.

Paisley Corporation owns 90% of Ackers Company. Akers Company owns 60%
of Baglin. Paisleys separate income for the current year is $540,000. Akerss
separate income is $240,000. Baglins separate income is $150,000.
7.

The formula for the consolidated noncontrolling interest is calculated as

a.
b.
c.
d.

8.

10% X $240,000.
(10% X $240,000) + (6% X $150,000).
(10% X $240,000) + (40% X $150,000).
(10% X $240,000) + (46% X $150,000).

The formula for consolidated net income is calculated as

a.
b.
c.
d.

$930,000 ($240,000 X 10%)

$930,000 ($240,000 X 10%) ($150,000 X 40%)
$930,000 ($240,000 X 10%) ($150,000 X 46%)
$930,000 ($240,000 X 10%) ($150,000 X 40%)
($150,000 X 10% X 50%)

Use the following information for Questions 9, 10, and 11.

Pace Corporation owns 70% of Abaza Corporation and 60% of Babon
Corporation. Abaza Corporation owns 20% of Babon Corporation. Paces
investment in Abaza was consummated in one transaction at a purchase price
$20,000 in excess of the book value. Paces purchase of Babon was made in one
transaction at a price $30,000 above book value. Abazas investment in Babon
was completed in one transaction at a purchase price $10,000 in excess of the
book value. The purchase price differential for all three investments was
attributable to goodwill. Paces separate income for the current year is $100,000.
Abazas separate income is $190,000, which includes a $10,000 unrealized loss
on the sale of land to Pace. Babons separate income is $150,000.

9.

The amount of consolidated net income for Pace Corporation and Abaza
for the current year is
a.
b.
c.
d.

10.

The amount of noncontrolling interest expense for the current year is

a.
b.
c.
d.

11.

$341,000.
$348,400.
$351,000.
$355,000.

$69,000.
$85,000.
$95,000.
$99,000.

The amount of goodwill in Paces consolidated balance sheet is

a.
b.
c.
d.

$50,000.
$52,000.
$58,000.
$60,000.

Use the following information for Questions 12 through 15.

Pahm Corporation owns 80% of the outstanding voting common stock of Abussi
Corporation, which was purchased for $60,000 over Abussis book value. The
excess purchase price was attributable to goodwill. Abussi Corporation owns 60%
of the outstanding common stock of Badock Corporation, which was purchased at
book value. The separate incomes of Pahm, Abussi, and Badock for the year are
$200,000, $240,000, and $260,000, respectively.
12.

Consolidated net income for the current year is

a.
b.
c.
d.

$504,800.
$516,200.
$545,200.
$557,200.

13.

The amount of income for the current year assigned to the minority
shareholders of Badock Corporation is
a.
b.
c.
d.

14.

The amount of income for the current year assigned to the minority
shareholders of Abussi Corporation is
a.
b.
c.
d.

15.

$100,000.
$104,000.
$120,000.
$140,000.

$48,000.
$53,200.
$74,000.
$79,200.

The amount of income assigned to the noncontrolling interest in the

current years consolidated income statement is
a.
b.
c.
d.

$142,800.
$154,800.
$183,200.
$195,200.

Exercise 1
Pacini Corporation owns an 80% interest in Abdoo Corporation, acquired on
January 1, 2004 for $700,000 when Abdoos stockholders equity consisted of
$600,000 of Capital Stock and $200,000 of Retained Earnings.
Abdoo Corporation acquired a 60% interest in Bach Corporation on July 1, 2004
for $180,000 when Bach had Capital Stock of $200,000 and Retained Earnings of
$50,000. On January 1, 2005, Abdoo acquired a 70% interest in Cabo Corporation
for $270,000 when Cabo had Capital Stock of $250,000 and Retained Earnings of
$100,000.
No change in outstanding stock of any of the affiliated companies has occurred
since the investments were made. All cost-book differentials are goodwill. The
stockholders equity section of the separate balance sheets of Abdoo, Bach, and

Cabo at December 31, 2005 are as follows:

Capital Stock
Retained Earnings
Total stockholders equity

$
$

Abdoo
600,000
280,000
880,000

Bach
$ 200,000
140,000
$ 340,000

Cabo
$ 250,000
130,000
$ 380,000

Required:
1. Compute the amount at which goodwill should be shown in the
consolidated balance sheet of Pacini Corporation and Subsidiaries at
December 31, 2005.
Jawaban:
Goodwill:
- PaciniAbdoo (100/80x700.000) 800.000 = 75.000
- AbdooBach (100/60 x 180.000) 250.000 = 50.000
- AbdooCabo (100/70 x 270.000) 350.000 = 35.700 (pembulatan)
2. Pacini and Abdoo have applied the equity method correctly. Determine the
balances of the three investment accounts at December 31, 2005.
Jawaban:
Kenaikan Investment:
- Abdoo: (880.000-(100/80x700.000)) x 80% = 4.000
- Bach: (340.000-(100/60 x 180.000)) x 60% = 24.000
- Cabo: (380.000-(100/70 x 270.000)) x 70% = 3.010

Exercise 2
Separate earnings and investment percentages for the three affiliates for 2005 are
as follows:
Separate
Earnings

Percentage
Interest in
Acres

Percentage
Interest in
Bain

Palace Company
Acres Inc
Bain Corporation

450,000
200,000
160,000

80%
70%
10%

Required:
Compute consolidated net income for Palace for 2005.
Jawaban:
Total NI Palace:
- Separate earning = 450.000
- Dari Acres Inc: 200.000 x 80% = 160.000
- Dari Bain Corp: 160.000 x (80% x 70%) = 89.600
TOTAL = 699.600
Exercise 3
Padhy Corporation owns 80% of Abrams Corporation, Abrams Corporation owns
60% of Bacud Corporation, and Bacud Corporation owns 10% of Padhy
Corporation. The separate incomes (excluding investment income), of Padhy,
Abrams, and Bacud are $300,000, $100,000, and $80,000, respectively.
Required:
Calculate the consolidated net income for Padhy Corporation and its subsidiaries,
Abrams and Bacud. Use the conventional method for your solution.
Jawaban:
Total Padhy Corp:
- Income sendiri = 300.000
- Dari Abrams: 100.000 x 80% = 80.000
- Dari Bacud: 80.000 x (80% x 60%) = 38.400
TOTAL = 418.400

Total Abrams Corp:

- Income sendiri = 100.000
- Dari bacud: 100.000 x 60% = 60.000
TOTAL = 160.000
Total Bacud Corp:
- Income sendiri = 80.000
- Dari Abrams: 100.000 x 10% = 10.000
TOTAL = 90.000